Are Frequent Flier Programs a Fool's Game?

Airline loyalty programs have long tempted their most frequent customers with upgrades, bonus points and other forms of special treatment. But the definition of a "frequent flier" for many carriers has begun to shift from one who flies lots of miles to earn rewards and elite status to one who simply opens his or her wallet the widest.

At one time it was possible to perform so-called "mileage runs" to earn miles cheaply (less than 4 cents paid per mile flown) by traveling during off-peak periods and adding extra connections. A small minority of passengers might book $500 mistake fares to Europe from the West Coast for the chance at increased upgrade priority, waived airline fees and enough award miles for two business class tickets to Bali.

New rules for earning elite status with two of the largest carriers, Delta Air Lines and United Airlines, have effectively set a floor between 10 and 12 cents per mile flown. Additional changes slated for 2015 will decrease the number of award miles most customers earn, raising the cost to about 20 cents per mile flown in order to earn both the elite benefits and award miles equivalent to what were provided just a few years ago. What's more, carriers have been simultaneously devaluing their award charts so that these miles don't go as far as they used to.

The shift to revenue-based loyalty

No-frills carriers like Southwest Airlines have long used what are called revenue-based loyalty programs, and their customers generally give them high marks. But their business models are fundamentally different in other ways: they often provide one class of service, fly mostly domestic routes and have more price-sensitive customers who prefer a regular discount over aspirational redemptions.

There's no way to rig a revenue-based system to your advantage because booking cheap tickets just means you'll earn fewer points and extra connections will just waste your time.

Whether larger, international carriers are making a mistake by copying their discount brethren is open for debate. But it is clear from current trends that loyalty programs of the future will reward only those customers who spend the most money with a preferred carrier and business travelers whose trips are fully reimbursable by employers. Is it still worthwhile for the average passenger to pursue elite status with an airline?

Ways to earn and benefit from status

Elite status can still be valuable to many passengers — even some infrequent leisure travelers — but earning that status requires more foresight and planning than ever before. Before you seek status, carefully evaluate how you currently travel, how you would like to travel (assuming you earn these benefits) and the competition that exists in your home market.

A woman who lives in Los Angeles and splits her travel between American Airlines and Delta Air Lines would be less likely to earn elite status with either one. But both American and Delta are partners with the Alaska Airlines Mileage Plan. She could credit all her miles to Alaska's Mileage Plan and earn status with benefits like priority boarding and better seat assignments even as she continues to fly on American and Delta.

If she were willing to book all her travel on Alaska, which has a strong presence on the West Coast and comparable fares, she could even lower the qualification requirements to earn her status faster and consider making an attempt to enter a higher elite tier. Alaska also offers some good award redemption opportunities on premium international carriers. In fact, it requires the same number of miles to fly all the way to Johannesburg (with a free stopover) as it does to visit Hong Kong.

Consider another scenario: A man who frequently takes short flights on regional jets wouldn't be able to take advantage of upgrades even if he holds elite status. But if he pays a lot for those flights by booking last-minute tickets for business and runs a lot of purchases through a mile-earning business credit card, then that elite status could enable him to avoid change and cancellation fees when redeems his miles for award travel.

Elite status matters only if you'll use it

If you don't value business or first-class travel and think all flying is uncomfortable, then you might not want the miles to begin with. Similarly, if you always use a carry-on, book far in advance to get the aisle seat you want and never change your travel plans, then you don't need to worry about waiving fees. If you fall into these categories, a cash-back credit card and a revenue-based loyalty program would be better choices.

Always consider your objectives before traveling and research the best path to achieve them. Even for seasoned travelers, it's not always direct or obvious. Sometimes the answer is staring you in the face. If you want something, pay for it. More and more carriers are offering discounted upgrades at the time of booking or at the gate rather than giving them away to elite members. In-flight cocktails, airport lounge access and more are all available for purchase. Checking an oversized bag? When you return from your trip go through your clothes and take note of how many you actually wore. Next time, carry on.

Are the perks of elite status really necessary? Some people imagine their life will be better since they can't stand the thought of being cooped up in a metal tube for five hours. Don't forget you'll have five days at your hotel once you land. Maybe your upgrade efforts would be better directed elsewhere.

At the end of the day, status tends to go to those who earn it and will use it. You might fit that description if you're a frequent business traveler who buys expensive tickets. You can still fit that description by being a scrupulous leisure traveler, evaluating your specific travel needs and taking steps to obtain that status. Most people just want to get from point A to B with minimum hassle. Elite status isn't necessarily for fools, but there are certainly more important things in life than agonizing over your place in the boarding queue.

About the author: Scott Mackenzie is a neuroscientist who learned how to travel and earn elite status on the cheap during graduate school. He now shares these tricks on the blog Travel Codex. You can also follow him on Twitter @Travel_Codex.